The control of the location and activity of stem cells depends on spatial regulation of gene activities in the stem cell niche. Using computational and experimental approaches, we have tested and found support for a hypothesis for gene interactions that specify the Arabidopsis apical stem cell population. The hypothesis explains how the WUSCHEL gene product, synthesized basally in the meristem, induces CLAVATA3-expressing stem cells in the meristem apex but, paradoxically, not in the basal domain where WUSCHEL itself is expressed. The answer involves the activity of the small family of HAIRY MERISTEM genes, which prevent the activation of CLAVATA3 and which are expressed basally in the shoot meristem.